BI raised interest rates six times between May to November 2018, by a total of 175 basis points, to combat capital outflows and put a floor under the rupiah IDR=, which plumbed levels not seen since the 1998 Asian Financial crisis.

However, an improvement in risk appetites, thanks to optimism that the Federal Reserve will stop raising U.S. rates and that there will be an easing of U.S.-China trade friction has helped the rupiah firm significantly.

“The main reason we are not expecting a rate hike this month is the improved performance of the currency, which has rebounded by 7.9 percent against the U.S. dollar since reaching its weakest point in 20 years in October,” Capital Economics said in a Jan. 11 note.

In 2019, the rupiah has strengthened about 2 percent - to around 14,085 to the dollar - making it the best performing emerging Asian currency. Bets on it turned bullish recently for the first time since early February 2018.

BI officials recently said the rupiah’s exchange rate has yet to reflect fundamentals.

Governor Perry Warjiyo has also vowed to remain “pro-stability” in setting monetary policy.

He has said the annual inflation rate, at 3.13 percent in December, would remain within BI’s target this year and economic growth should be in a 5.0-5.4 percent range.

Economists are divided on how BI will move later in 2019.

HSBC last week removed any rate hike from its outlook on the Fed’s more dovish stance. ANZ maintained its forecast for one more 25 basis point rate hike by June, though signalled an increasing chance that view could change.

“BI’s focus on rupiah stability means its monetary policy stance will continue to be dependent on the financial market backdrop,” said ANZ economist Krystal Tan said in a note.

In the Reuters poll, 10 economists gave a longer-term view on the policy rate. The median forecast was for 6.25 percent at the end of 2019.

Polling by Nilufar Rizki and Tabita Diela in JAKARTA and Mittal Khushboo in BENGALURU; Writing by Gayatri Suroyo; Editing by Richard Borsuk